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8 terms

Financial Risk Management CH2

S.U. Tobler's class
STUDY
PLAY
Margin
is cash or marketable securities deposited by an investor with his or her broker
Delivery
If a futures contract is not closed out before maturity, it is usually settled by
Open interest
the total number of contracts outstanding. This equals to number of long positions or number of short positions
Settlement price
the price just before the final bell each day. This is used for the daily settlement process
Volume of trading
the number of trades in 1 day
forward contract
is an OTC agreement to buy or sell an asset at a certain time in the future for a certain price
Forward
*Private contract between two parties
*Not standardized
*Usually one specified delivery date
*Settled at end of contract
*Delivery or final settlement usual
*Some credit risk
Future
*Traded on an exchange
*Standardized
*Range of delivery dates
*Settled daily
*Usually closed out prior to maturity
*Virtually no credit risk